Sahitya Mudranalaya Pvt.Ltd., Ahmedabad V. The Dy.CIT,Circle-8, Ahmedabad

ITA 2164/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8204 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUDIT NAGAPL
• Assessee Lawyers: MUKESH PATEL
• Keywords: Earning of tax free income; Proportionate interest
• Section: 142(1); 14A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.2164/AHD/2015 / ASSTT. YEAR: 2011-2012 SAHITYA MUDRANALAYA P.LTD. C/O.MUKESH M. PATEL & CO. TAX PLANNING HOUSE ABOVE USMANPURA UNDERBRIDGE AHMEDABAD 380 013. PAN : AACCS 9591 B VS. DCIT, CIR.8 AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI MUKESH PATEL, AR REVENUE BY : SHRI MUDIT NAGAPL, SR.DR ! / DATE OF HEARING : 27/10/2017 '#$ ! / DATE OF PRONOUNCEMENT: 27/10/2017 %& / O R D E R PER PRAMOD KUMAR, ACCOUNTANT MEMBER PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF ASSES SEE AGAINST ORDER OF LD.CIT(A)-9, AHMEDABAD DATED 29.5.2015 PAS SED FOR ASSTT.YEAR 2011-12. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING DISALLOWANCE TO THE EXTENT OF R S.16,59,173/- UNDER SECTION 14A OF THE INCOME TAX ACT, 1961. ITA NO.2164/AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.9.2011 DECLARING TOTAL INCOM E AT RS.9,97,75,154/-. THE CASE OF THE ASSESSEE WAS SELE CTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS ISSUED ON 23.8.2012 AND THEREAFT ER A NOTICE UNDER SECTION 142(1) WAS ALSO ISSUED ON 1.7.2013, W HICH WAS DULY SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOU NTS, IT REVEALED TO THE AO THAT ASSESSEE HAS EARNED DIVIDEN D INCOME OF RS.50,31,646/- WHICH IS EXEMPT INCOME. TO THE SHOW CAUSE NOTICE ISSUED BY THE AO AS TO WHY DISALLOWANCE U/S. 14A SHOULD NOT BE MADE IN VIEW OF HUGE INVESTMENT, THE ASSESSEE SU BMITTED THAT INVESTMENT IN SHARES AND SECURITIES WERE NOT REGULA R ACTIVITIES OF THE ASSESSEE AND DID NOT REQUIRE MUCH ADMINISTRATIV E ACTIVITIES. THE SAID INVESTMENTS WERE MADE OUT OF CASH SURPLUS AND THERE WAS NO BORROWING TO THAT EFFECT. HOWEVER, THE ASSE SSEE HAS SUO MOTO DISALLOWED ADMINISTRATIVE EXPENSES TO TAKE CARE OF REQUIREMENT OF SECTION 14A READ WITH RULE 8D. THE LD.AO, HOWEVER, DID NOT ACCEPT THESE SUBMISSIONS OF THE AS SESSEE AND PROCEEDED TO COMPUTE THE DISALLOWANCE U/S.14A R.W. RULE 8D AND DISALLOWED A FURTHER SUM OF RS.16,59,173/-. IN F URTHER APPEAL BEFORE THE LD.CIT(A), THE ASSESSEE COULD NOT SUCCEE D. NOW ASSESSEE IS BEFORE US. 4. AT THE THRESHOLD, THE LD.COUNSEL FOR THE ASSESSE E SUBMITTED THAT WHEN SIMILAR ISSUE HAS RISEN IN THE ASSTT.YEAR S 2009-10 AND 2010-11 THE ASSESSEE WENT IN APPEAL BEFORE THE TRIB UNAL, AND THE TRIBUNAL IN ITA NO.S.1861/AHD/2012 AND 3101/AHD/201 3 VIDE ORDER DATED 31.8.2017 HAS DELETED DISALLOWANCE MADE BY THE REVENUE AND ALLOWED THE CLAIM OF THE ASSESSEE, AND THEREFORE, THE CLAIM OF THE ASSESSEE IN PRESENT ASSESSMENT YEAR MA Y ALSO BE ITA NO.2164/AHD/2015 3 ALLOWED. THE LD.COUNSEL FOR THE ASSESSEE HAS PLACE D ON RECORD COPY OF THE ABOVE ORDER. THE LD.DR THOUGH SUPPO RTED THE ORDERS OF THE REVENUE AUTHORITIES DID NOT DISPUTE A BOVE ORDER OF THE TRIBUNAL ALLOWING SIMILAR CLAIM OF THE ASSESSEE IN THE ASSESSMENT YEAR 2009-10- AND 2010-12. 5. WE HAVE GONE THROUGH THE RECORD AND CONSIDERED SUBMISSIONS OF BOTH THE PARTIES. WE FIND THAT SIMI LAR CLAIM OF ASSESSEE FOR THE ASSESSMENT YEARS 2009-10 AND 2010- 11 WAS ALLOWED BY THE TRIBUNAL VIDE ORDER CITED SUPRA. RE LEVANT FINDINGS READ AS UNDER: 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO TH E ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS TH AT THE ASSESSEE HAD SUO MOTU DISALLOWED PROPORTIONATE INTE REST EXPENSES AND ADMINISTRATIVE EXPENSES. IT IS ALSO TR UE THAT THE ASSESSEE HAS ENGAGED THE SERVICES OF A PORTFOLI O MANAGER AND HAS DISALLOWED THE PORTFOLIO MANAGEMENT FEES PA ID BY IT. IT IS ALSO TRUE THAT THE ASSESSEE WAS HAVING SUFFIC IENT OWN FUNDS TO MEET THE INVESTMENTS IN SPITE OF THIS, THE ASSESSEE HAS DISALLOWED PROPORTIONATE INTEREST EXPENSES WHIC H WAS NOT NECESSARY. BE THAT AS IT MAY, IT IS NOW WELL SE TTLED THAT UNLESS SOME ERROR IS POINTED OUT IN THE DISALLOWANC E MADE BY THE ASSESSEE, THE A.O. CANNOT MECHANICALLY INVOKE T HE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE ACT AND RULES. THE A.O. HAS NOT POINTED OUT ANY DEFECT/ERRO R IN THE METHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE. NOR HE HAS POINTED OUT ANY ERROR IN THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE. DEVOID OF SUCH FINDINGS, IN OUR CONSI DERED OPINION, NO FURTHER DISALLOWANCE NEED TO BE MADE U/ S. 14A READ WITH RULE 8D OF THE ACT. SINCE FACTS AND CIRCUMSTANCES BEING SIMILAR AND NO DIFFERENCE BEING POINTED OUT BY THE REVENUE IN THIS BEHALF, WE ARE NOT INCLINED TO DEVIATE OURSELVES FROM THE VIEW TAKEN B Y THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ORDER PASSED I N THE ASSESSMENT YEAR 2009-10 AND 2010-11. RESPECTFULLY FOLLOWING ITA NO.2164/AHD/2015 4 THE SAME, WE DELETE THE IMPUGNED DISALLOWANCE AND A LLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 27 TH OCTOBER, 2017. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (PRAMOD KUMAR) ACCOUNTANT MEMBER AHMEDABAD; DATED 27/10/2017 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) 5. )./ '' , / DR, ITAT, 6. /01 2 / GUARD FILE. %& / BY ORDER, TRUE COPY 3 / ,4 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD